this released by Pacific Drilling
Pacific Drilling Extends Option for 7th Drillship
Thursday, June 23, 2011
Pacific Drilling has reached an agreement with Samsung Heavy Industries to extend until October 31, 2011 an option to construct a seventh ultra-deepwater drillship.
With its best-in-class drillships and highly experienced team, Pacific Drilling is a fast growing company that is dedicated to becoming the preferred ultra-deepwater drilling contractor. In addition to three ultra-deepwater drillships delivered to date, Pacific Drilling expects delivery of an additional drillship in August 2011 and has two drillships on order at Samsung for delivery during 2013.
Since Pacific has been one of the most agressive companies with building new drillships without contracts backing them up, to me this is a sign that they are starting to have second thoughts about continuing down the same path.
I also have to note that in the past couple of month there haven’t been any announcements by any of the other drilling companies for additional newbuilds (except for the ridiculous announcement by Rowan to enter the deepwater market with absolutely no deepwater experience) which might be a further sign that we’ve hit the saturation point. Time alone will tell.
Ocean Rig UDW Inc. exercises drill ship option at Samsung
DryShips Inc. (NASDAQ:DRYS), reports that its majority-owned subsidiary has exercised its third newbuilding option to construct a seventh generation ultra deepwater drillship at Korean shipbuilder Samsung Heavy Industries. The drillship is a sister ship to two previously ordered in options exercised in April 2011. The higher specifications of these ships include:
[ul]
[li]Capability to drill in 12,000 feet of water depth[/li]> [li]a seven ram BOP[/li]> [li]a dual mud system[/li]> [li]enhanced riser handling and storage system[/li]> [li]ballast water treatment system[/li]> [/ul]
Total yard cost of this drillship is approximately $608 million, out of which a total amount of about $242 million has already been paid to the yard from cash on hand. The remaining amount of approximately $366 million is payable upon delivery from the, currently scheduled for November 2013.
George Economou, Chairman and CEO commented:
"The demand for ultradeepwater drilling units is strengthening every day and we see substantial growth in the next several years from across the globe. By exercising our third option for delivery in 2013 we are in a unique position to take advantage of the positive market fundamentals. The attractive price and payment terms allows us sufficient time to increase the backlog and arrange financing on attractive terms.
“We are truly in the midst of a new and exciting phase for Ocean Rig UDW Inc. With financing in place, our strong balance sheet, the contract backlog of $2 billion on our existing fleet and our sizable free cash position today, OCR UDW is well positioned to become the leading international drilling contractor of choice.”
June 24, 2011
Further evidence that the big three Korean shipbuilders are fueling this ridiculous boom. I am getting to seriously wonder if there will be a major downward slide in wages in the drilling sector once new rigs go straight to mothballs (which I think is already beginning to happpen).
How does a supplier fuel a boom? If you bought a snuggy it was because you called and purchased, not because they called you and made you buy it. Just a thought. I don’t follow the drill ship drama so I don’t have first hand knowledge of the market, but one would think that a free-market will iron itself out because it takes a buyer and a seller to tango. Who leads in that dance is irrelevant.
[QUOTE=Ea$y Money;51567]How does a supplier fuel a boom?[/QUOTE]
If a major automaker lowered the price of their cars 20% and offered 0% financing with no credit check, many people who normally might not buy would including those who probably “shouldn’t buy”. It is that last category which creates a “boom”. Same thing happned in the housing market, build way too many houses, offer really low cost mortgages and make the threshold to get one of those loans ridiculously easy and “down goes Frazier!”
The bet being placed here is that once the World recession recovers and these emerging countries ramp up their GDP, world oil demand will surge.
Plus, these companies are finally replacing old junk. Bubbles require false demand (ie. Barnies/Dodds Housing Bubble). China and India are the drivers
of this line of thought. Just my 2 cents. ShipMate 1
I guess it come down to how many deepwater wells remain on the major’s backlog lists. I have heard that the number is in the thousands so I suppose that they might be ready to sign up all this new iron to clear that backlog but from what I have seen so far is that they are not pouncing on each newbuild hitting the water. I can actually think that they are prepared to sweat the rig owners do get them at much more favorable dayrates. I know this happened to Maersk Drilling and the last of their three semis built in Singapore. They ended up taking a $200k/day haircut in order to put her to work.